IHH plans takeover of India’s Fortis
Healthcare group prepares US$1bil to fund the share purchase
PETALING JAYA: IHH Healthcare Bhd is reportedly set to launch a takeover bid to buy the non-promoter shares of India’s Fortis Healthcare Ltd within the next few days.
This came nine months after the company walked out of bilateral negotiations with promoters Malvinder and Shivinder Singh who were then in control, according to Economic Times of India.
“The move will likely set the stage for competition with TPG-Manipal Hospitals as each party tries to acquire a minimum holding of 51%, going up to as much as 75% stake in the company,” it added.
Manipal is believed to be working with Kotak Mahindra bank, the report said, adding that IHH, the world’s second largest healthcare group, has roped in investment bank Citi to be the adviser and was preparing a US$1bil war chest to fund the share purchase.
Talks are currently on with banks to tie up financing. The promoters of Fortis currently hold less than 1% of the company at 0.77% .
Yes Bank, it was reported, has emerged as the single largest shareholder with a 17.03% stake in India’s second-largest private hospital chain. The rest is held among the public and other institutional shareholders
Fortis is a leading integrated healthcare delivery service provider in India.
The healthcare verticals of the company included hospitals, diagnostics and day care specialty facilities.
Currently, the company operates its healthcare delivery services in India, Dubai, Mauritius and Sri Lanka with 45 facilities (including projects under development), 10,000 potential beds and 314 diagnostic centres.
Meanwhile, analysts contacted by StarBiz said IHH’s reported takeover of Fortis was strategic in terms of the former’s expansion in India.
However, it said it would not be an easy exercise due to legacy and management control issues.
Although Fortis is a prized asset that will help IHH penetrate the lucrative Indian healthcare market, the analysts viewed the move as “fluid”.
“It’s premature to speculate on the takeover as similar deals have fallen through between the two leading healthcare groups in the region.
“Historically, the acquisitions by IHH of any healthcare or hospital chain would involve having management control. But even if the takeover of Fortis were to materialise, IHH would want to have management control and make board decisions. This will not be a simple takeover as there could be resentment and conflict between IHH and Fortis’s institutional shareholders.
“Other challenges include the various legacy as well as compliance and regulatory issues,” said a bank-backed analyst who closely monitors the company.
IHH’s shares closed one sen lower yesterday to RM6.08, representing a market capitalisation of just over RM50bil.
The company has more than 1,500 licensed beds and facilities delivering tertiary and quaternary healthcare in India which allowed it to overtake its competitors in Bengaluru, Chennai, Hyderabad and Mumbai.
The group acquired its Indian platform in 2015 via Parkway Pantai Ltd’s investment of a 51% stake in Continental Hospital Ltd and a 72% stake on a fully-diluted basis in Ravindranath GE Medical Associates Private Ltd.
It’s premature to speculate on the takeover as similar deals have fallen through between the two leading healthcare groups in the region. A bank-backed analyst